“The profits or gains arising from the occupation of woodlands in Ireland, managed on a commercial basis and with a view to the realisation of profits, shall not be taken into account for any purpose of the Income Tax Acts” Section 18, Finance Act 1969.

Income Tax

  • In effect this means that Forest Grants, Forest Premiums, sale of forest thinnings and sale of clearfell are ALL exempt from Income Tax.
  • Dividends paid by companies out of profits in respect of woodland income are exempt.

Capital Gains Tax (CGT)

  • Gains arising on the disposal of felled timber are not chargeable to CGT. In the case of disposal of woodlands, CGT is chargeable on the lands only and not on the growing trees, subject to the inflation adjusting factor.
  • Capital sums received under a policy of insurance in respect of destruction or damage of the trees is exempt from CGT.

Capital Acquisitions Tax (CAT)

  • Gifts between husband and wife are exempt from CAT. A privately owned forest is liable to gift and inheritance tax when taken as a benefit under a gift or inheritance.
  • Commercial forestry qualifies as agricultural property and is therefore eligible for agricultural relief.

Stamp Duty

  • Any deed executed under a seal is subject to Stamp Duty, therefore a licence to cut timber is liable to Stamp Duty.
  • The sale of growing timber in commercial woodlands is exempt from Stamp Duty; the sale of the underlying land is not exempt.
  • Under Section 81 of the Stamp Duties Consolidation Act, 1999 land purchased by a “Young Trained Farmer” is exempt from Stamp Duty.

Universal Social Charge

The Universal Social Charge is a tax payable on gross income, including notional pay, after any relief for certain capital allowances, but before pension contributions.

The rates of Universal Social Charge are:

Universal Social Charge – Rates are as follows: 

Part of Total Income (€) Rates Rate of Levy %
The first €10,036 2
Between €10,036 – €16,016 4
Above €16,016 7

 

This summary reflects the current tax legislation. As you see, the Irish Tax System looks very favourably on forestry activities. This has proved an essential element in the expansion of the forest industry in Ireland. While legislation may change, it is believed highly unlikely that any unfavourable changes will be made in the next 40 – 50 years. This is the length of time estimated for Ireland to attain the target levels of forest cover set out in the Strategic Plan for the Development of the Forest Industry in Ireland – Growing for the Future.

(as these rates can change please check with your tax advisor)

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1800 928 900